Archived decisions

Hampshire Fire and Rescue Authority Item 12

31 May 2006

Response to consultation on the proposed governance arrangements

for Regional Control Centres

Report by the Chief Officer

Contact: David Howells, 023 8063 6833, [email protected]

1

Summary

1.1

The Authority has been invited to comment on proposals for the governance arrangements for the new Regional Control Centres (RCC). A draft response has been prepared by answering some specific questions set out in the attached consultation template. The Authority is asked to consider and approve the response which needs to be returned to the Department for Communities and Local Government (DCLG) by 14 June 2006.

1.2

The Authority is also asked to approve sharing our response with the other fire and rescue authorities in the South East Region. West Sussex - lead authority for the RCC project - has agreed to collate the various authorities' responses and to prepare a response on behalf of the South East Fire and Rescue Services Regional Management Board.

2

RecommendationError! Bookmark not defined.

2.1

That the response to the proposed governance arrangements for the new Regional Control Centres, as set out in the appendix to this report, be approved and submitted to the Department for Communities and Local Government; and that it also be shared with other fire and rescue authorities in the South East Region.

3

Equality Impact Assessment

3.1

The proposals within this report are considered compatible with the provisions of the European Convention on Human Rights, the Human Rights Act 1998, and the Race Relations (Amendment) Act 2000.

Background Information (Section 100D of Local Government Act 1972)

The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report:

_ FiReControl Project - Consultation document on governance arrangements issued by ODMP/DCLG April 2006

Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act.

Response Form

Please return by Wednesday 14^th June 2006 to:

[email protected] with "FiReControl Governance Consultation Response" in the email subject line.

Or to:

Daniel Hallam,

Floor 4, Allington Towers,

PO Box No 50200,

Allington Street,

London SW1E 5WY

Name

David Howells

Director of Corporate Services

Organisation

Hampshire Fire and Rescue Authority

Address

Headquarters

Leigh Road

Eastleigh

Hampshire

SO50 9SJ

E-mail

[email protected]

Telephone

023 8062 6833

Responses to specific questions:

Q1

Do the governance arrangements described above offer the most effective way of:

· delivering a resilient national control centre network and the effective management of national resilience assets; while at the same time

· maintaining FRA accountability and an appropriate level of flexibility for elected members in ensuring that the service meets the needs of local people?

In the absence of a full and detailed business case it is not easy to judge whether the proposed governance arrangements offer the most effective way of managing the various financial, operational and legal issues. Consequently, it is difficult to say whether the arrangements would satisfy the tests of a rigorous best value approach. In particular, they do not appear to adequately address nor satisfy the following issues:

· The Government's objective that the fire and rescue service should remain locally accountable. Under the proposals the RCCs would not be run by the fire and rescue authorities but by the RCC company over which no single authority would have control. While each authority will have representation on company board, it will not be able to control its actions. Local accountability will inevitably be more distant and less effective than the current local government structure.

· Proportionality. There is a related concern over whether each constituent authority of a RCC company will have the same voting rights or whether these should be determined proportionally to, say, population served and/or the financial contribution made by each authority. If each authority had just one vote, then that might be seen as disadvantageous for the larger participating/contributing authorities in so far as there would be no way of ensuring that they would obtain value for their money or appropriate influence on the running of the company in proportion to their contributions. However, if the larger authorities were allocated a proportionately greater number of votes, then the smaller authorities would understandably claim to have little or no control over the management of the company. It is difficult to see how a commonly acceptable arrangement can be achieved that will genuinely safeguard local accountability.

· Control over the contract. On the assumption that each authority will enter into a contract with its respective RCC company for the provision of the agreed services, it is difficult to envisage how the sort of controls usually present in a typical commercial contract can be effectively achieved and maintained. There will be no possibility of terminating the contract because there is no realistic possibility of awarding the work to any other body. Also, there is no point in imposing sanctions for poor performance by, say, deducting liquidated damages because the company has no (liquid) assets other than those which the same constituent authorities contribute towards operating costs.

· The implications for governance arrangements in the context of, and expectation for, full inter-operability as a national network. It is very unclear how each RCC board will interact with others. Has this been properly thought through? How this will be achieved in contractual terms - particularly in respect of assets (equipment, accommodation, people) located in the RCCs but there to deliver/provide `national' activities.

· Changes to Articles. Related to national context, it seems that the intention to have an agreement to constrain RCC companies from changing the Articles without the agreement of all fire and rescue authorities in the country. This is most unlikely to be achieved in practice and might even be said to further dilute local accountability by effectively constraining the ability to make locally-based governance decisions. However, putting that issue to one side, it is further suggested that central government approval would not be required in such circumstances: i.e. by leaving this freedom (or control) with local authorities. In practice - and given the operating context - it would probably make more sense if only the consent of the Government was required to approve changes that might have implications for successful inter-operability.

· TUPE. There is a lack of clarity as to whether redundancies will be the responsibility of existing employers (the constituent authorities) or, more usually, the incoming organisation (the RCC companies). While the consultation document suggests that there are good staff management reasons for the current employers undertaking the redundancy process this does not fit well with the normal operation of TUPE.

Given these issues, it is difficult to envisage how an appropriate level of flexibility (i.e. to meet the needs of local people and communities) can really be achieved by elected members on the company boards. Much would seem to depend on scope for flexibility offered in the operating systems of the mobilising application(s) of the RCCs rather than the governance arrangements themselves. However, unless reasonable and genuine flexibility can be assured, there is a risk that the implementation of important elements of local Integrated Risk Management Plans (IRMPs) will be frustrated and devalued.

Q2

Should the local authority companies be restricted in the scope of their activities as described above, or should they be given the freedom to diversify?

Given that the companies will be separate legal entities (from both the constituent authorities and the RMBs) there should be restrictions put in place to prevent a Company going off on a `frolic of its own' which may not be in the individual or collective best interests of the authorities. There would be potential financial risks for authorities if companies pursued diverse ventures that failed or made operating losses. A tight set of Articles and memorandum of Association would prevent this. That said, carefully worded Articles ought not to be a barrier to companies pursuing management arrangements that would deliver financially advantageous better ways of delivering services on behalf of authorities across the region. This could include currently `out of scope' activities.

Q3

Should authorities be given complete freedom in the composition and selection of board members and the naming of their company?

Yes / No

Provided that this does not create difficulties for the contractual relationship between the various RCC boards, it seems reasonable that authorities should be given freedom to decide the composition of the company boards and the selection of its members. It is assumed (from the National Framework) that this would initially be the responsibility of the RMBs to determine. However, from the perspective of trying to maintain some degree of local accountability, there seems to be no justification for appointing members or directors on the board that are not in some way directly involved in, or representative of, the management of a local fire and rescue authority (whether as an elected member or as an officer). That said, there may be merit in the company having the power to co-opt or appoint independent (non-authority) members to the board with the aim of gaining specific professional expertise in particular areas. The model used by FireBuy might be worth considering.

For simplicity it is seems sensible to have some national consistency in the naming of the companies. Perhaps the only variation needs to be an appropriate prefix to describe the government region served, e.g. "South East Regional Fire and Rescue Control Centre"

Q4

Should there be a relationship between RCC companies and RMBs and if so what form should it take?

We do not consider that there should be any formal relationship between the companies and the RMBs. Once a company is set up and running, it is there to provide a service, not to the RMB, but to the constituent authorities that will be charged individually for the services delivered. While there may well be informal liaison and discussion at meetings of RMBs about the operation of the companies (if only because there may be dual membership), the RMBs should have no formal or direct involvement in the running of the companies.

With reference to Annexe C of the Consultation Document, we would envisage that the Chief Fire Officer (or nominated representative) would be a director on the board of the company together with one [or more] (elected) members from each authority - the number of members to be determined in the light of the view that is taken on proportionality/voting rights (see response under Question 1 above).

Q5

Should RCC companies be subject to the same provisions on conduct and maladministration as local authorities and other relevant bodies, and to the rules relating to local authority indemnity?

Yes / No

It seems eminently sensible that companies should be subject to the same provisions as local authorities. Some form of scrutiny body should be established to oversee the governance arrangements.

Q6

Are you content with the draft Memorandum and Articles of Association? Please comment freely on both using the table below.

Yes, they are broadly standard provisions and they appear to provide adequate protection for the directors and staff. Specific questions arise:

· Will the Department for Communities and Local Government (DCLG) bear the legal costs involved in setting up the RCC companies?

· Will provision be made, in the Articles or elsewhere, for the monitoring of performance against agreed levels (standards) of service delivery? Will these be a national set of minimum performance standards?

Although the constituent authorities are themselves protected, the reality is that the authorities could not afford to let companies `go under'. This is why we favour direct control by authorities and not by the RMBs.

Articles of Association

Article 28: This article will need to considered again if there is to be any form of proportionate or differential voting between the authorities at both general and/or board meetings. There needs to be sufficient flexibility to allow authorities the freedom to decide these arrangements when the company is being set up.

Article 48 (e): There may be problems in setting down a rule that says that the office of director is vacated if there is absence from the meetings for six consecutive months. Much depends on the frequency of meetings. It might be preferable to leave it to individual authorities to remove as their representatives those directors considered to be poor attendees / representatives.

Article 60: The quorum would presumably be affected by how many votes each authority representative might eventually be given.

Memorandum of Association

One of the objectives says that "the company shall respect ... the policies of the CFOA..." It is not clear what this might mean in practical terms.

The clause relating to cessation of trade, says that any property remaining shall be distributed equally among the members. In practical terms, this would be very difficult to implement equitably especially given the different sizes of authorities and the variable contributions to operating costs they will be making. For this reason, perhaps it ought to be said at the outset that distribution would be proportionate to the amount paid by each authority in the last full year prior to the company being wound up.

Q7

Do FRAs have views about the best way to manage the relationship between the RMB and the company in the running of the project?

Prior to `go-live' the National Framework assumes that the RMBs will be responsible (in conjunction with the Government) for overseeing the project at regional level. Once the company has been set up, the RMBs should cease to have any formal link in the governance arrangements. Significant `pre-go-live' decisions need to be approved/ratified by each and every constituent authority. In effect, the RMB acts as an advisory body for the authorities, we do not consider that the RMBs should be given any executive authority to make binding commitments without authorities having had the opportunity to consider the implications of decisions for themselves. This is central to maintaining local accountability in the early stages of the project.

Please comment freely on the draft Memorandum and Articles of Association using this table.

No.

Page Number

Paragraph Reference

Is it a comment, new wording or other (C, NW, Other)

Comment about the paragraph reference. Include alternative wording and new requirements if appropriate

1.

NB: Not used - all comments incorporated in the above.